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Last week’s events provided some of the most dramatic market volatility since the flash crash that affected equity and futures markets in 2010. The Swiss National Bank’s move to drop the minimum exchange rate and cut interest rates even further saw a near 40% devaluation in the EURCHF pair before liquidity returned. The absence of liquidity and the pace at which the move occurred caught even veteran traders by surprise. The losses suffered by hedge funds, banks, brokers and traders have still not been totaled, as participants return this week to assess the damage. The one main distinguishing characteristic of the event that remains omnipresent was the lack of proper risk management controls in place at these various institutions.
As a firm, NetoTrade was able to deftly avoid the complications facing peers and competitors by routing orders carefully and maximizing liquidity provision for clients. Quoting remained uninterrupted, and the firm was able to successfully navigate difficulties faced by the sector at large. This is a testament to the emphasis the firm places on technology and risk management, especially at moments of brutal market volatility.
Gold is Shining
In the wake of the turmoil in currency markets, the time to pivot towards precious metals has never been clearer. With Central Banks weighed down by the pressure of balance sheets and increasingly desperate policies, fiat currencies are becoming increasingly risky as a store of value. The epic money printing bonanza that the European Central Bank is poised to announce is further proof that the risks associated with holding fiat currencies have steadily increased, as investors seek safety from the approaching storm. Although gold has recently tested multi-year lows, the current upward surge is evidence of fear gripping traders as they race to secure assets.
As an asset, gold has proved an outlier, remaining a means of exchange for millennia. The shiny yellow metal is unlikely to lose its importance, as Central Banks around the globe race to secure physical bullion. Although prices have remained suppressed for some time, any renewed environment of risk-aversion is likely to see prices explode to the upside. For securing wealth and stabilizing risk, gold has withstood the test of time, and thus proves no better choice to hedge against uncertainty.
Choose ECN and STP From NetoTrade
As liquidity nearly froze over for most institutional and retail traders during the malaise of last Thursday’s decision, NetoTrade customers experienced no suspension in trade execution, as the Dealing Team made a disciplined, coordinated effort to ensure a stable trading environment. The firm’s emphasis on providing interbank liquidity to clients through ECN and STP platforms certifies that the company’s attention to risk management is not overlooked. These trades are sent directly to the interbank market to be filled, and the subsequent exposure is carefully monitored to safeguard client positions.
Choose Risk Management from NetoTrade
As a financial services provider, NetoTrade strictly complies with minimum capital requirements. In accordance with market standards, the firm keeps client funds and operational funds separate, thus safeguarding customer investment capital against non-market risk. These substantial measures, along with the provision of first-class research and education services from an enthusiastic Analysis Department, give clients the edge in conquering financial markets. Clients are diligently prepared to confront the challenges presented by any and all market conditions.
As markets continue to change and evolve, you too should expect no less from your broker. Visit NetoTrade now to see the future of real-market trading in practice today, and learn how – with a responsible broker – the client’s interests come first.
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